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Wednesday, January 30, 2013

BP Pleads Guilty To 14 Criminal Counts; Will Pay Record $4 Billion

Jan 29: Attorney General Eric Holder announced that BP Exploration and Production Inc. pleaded guilty on January 29, to 14 criminal counts for its illegal conduct leading to and after the 2010 Deepwater Horizon disaster, and was sentenced to pay $4 billion in criminal fines and penalties, the largest criminal resolution in U.S. history [See WIMS 11/27/12]. He said, "Today's guilty plea and sentencing represent a significant step forward in the Justice Department's ongoing efforts to seek justice on behalf of those affected by one of the worst environmental disasters in American history. I'm pleased to note that more than half of this landmark resolution -- which totals $4 billion in penalties and fines, and represents the single largest criminal resolution ever -- will help to provide direct support to Gulf Coast residents as communities throughout the region continue to recover and rebuild."

Assistant Attorney General Lanny Breuer of the Justice Department's Criminal Division said, "The Deepwater Horizon explosion was a national tragedy that resulted in the senseless deaths of 11 people and immense environmental damage. Through the tenacious work of the Task Force, BP has received just punishment for its crimes leading up to and following the explosion. The Justice Department will keep a watchful eye on BP's compliance with the plea agreement's terms, including the requirements of full cooperation with the department's ongoing criminal investigation, implementation of enhanced safety protocols and adherence to the recommendations of two newly installed monitors. Should BP fail to comply, we will act swiftly and firmly."

BP's guilty plea was accepted, and the sentence was imposed, by U.S. District Judge Sarah S. Vance of the Eastern District of Louisiana. During the guilty plea and sentencing proceeding, Judge Vance found, among other things, that the consequential fines imposed under the plea agreement far exceed any imposed in U.S. history, and are structured so that BP will feel the full brunt of the penalties. She also noted that the agreement provides just punishment and significant deterrence, requiring detailed drilling safeguards, monitors and other stringent, special conditions of probation so that BP's future conduct will be closely watched.

BP pleaded guilty to each count charged in an information filed in U.S. District Court in the Eastern District of Louisiana, including 11 counts of felony manslaughter, one count of felony obstruction of Congress and violations of the Clean Water and Migratory Bird Treaty Acts. In its guilty plea, BP admitted that, on April 20, 2010, the two highest-ranking BP supervisors onboard the Deepwater Horizon, known as BP's "Well Site Leaders" or "company men," negligently caused the deaths of 11 men and the resulting oil spill. The company also admitted that on that evening, the two well site leaders observed clear indications that the Macondo well was not secure and that oil and gas were flowing into the well, but chose not to take obvious and appropriate steps to prevent the blowout. Additionally, BP admitted that as a result of the Well Site Leaders' conduct, control of the Macondo well was lost, resulting in catastrophe.

BP also admitted during its guilty plea that the company, through a senior executive, obstructed an inquiry by the U.S. Congress into the amount of oil being discharged into the Gulf while the spill was ongoing. BP also admitted that the senior executive withheld documents, provided false and misleading information in response to the U.S. House of Representatives' request for flow-rate information, manipulated internal estimates to understate the amount of oil flowing from the well and withheld data that contradicted BP's public estimate of 5,000 barrels of oil per day. At the same time that the senior executive was preparing his manipulated estimates, BP admitted, the company's internal engineering response teams were using sophisticated methods that generated significantly higher estimates. The Flow Rate Technical Group, consisting of government and independent scientists, later concluded that more than 60,000 barrels per day were leaking into the Gulf during the relevant time, contrary to BP's representations to Congress.

According to the sentence imposed by Judge Vance pursuant to the plea agreement, more than $2 billion dollars will directly benefit the Gulf region. By order of the court, approximately $2.4 billion of the $4.0 billion criminal recovery is dedicated to acquiring, restoring, preserving and conserving  in consultation with appropriate state and other resource managers  the marine and coastal environments, ecosystems and bird and wildlife habitat in the Gulf of Mexico and bordering states harmed by the Deepwater Horizon oil spill. This portion of the criminal recovery is also to be directed to significant barrier island restoration and/or river diversion off the coast of Louisiana to further benefit and improve coastal wetlands affected by the oil spill. An additional $350 million will be used to fund improved oil spill prevention and response efforts in the Gulf through research, development, education and training.

BP was also sentenced to five years of probation -- the maximum term of probation permitted under law. The company is also required, according to the order entered by the court pursuant to the plea agreement, to retain a process safety and risk management monitor and an independent auditor, who will oversee BP's process safety, risk management and drilling equipment maintenance with respect to deepwater drilling in the Gulf of Mexico. BP is also required to retain an ethics monitor to improve its code of conduct to ensure BP's future candor with the U.S. government.

At the hearing, Luke Keller, a Vice President of BP America Inc., addressed the Court, the families of the deceased, and other victims of the Deepwater Horizon tragedy and reiterated the company's deep regret and apology for its role in the Deepwater Horizon accident. He said, "We -- and by that I mean the men and the women of the management of BP, its Board of Directors, and its many employees -- are deeply sorry for the tragic loss of the 11 men who died and the others who were injured that day. Our guilty plea makes clear, BP understands and acknowledges its role in that tragedy, and we apologize  BP apologizes  to all those injured and especially to the families of the lost loved ones. BP is also sorry for the harm to the environment that resulted from the spill, and we apologize to the individuals and communities who were injured."

In a related matter, U.S. District Court Judge Jane Triche Milazzo has scheduled a hearing in U.S. District Court in New Orleans, Louisiana, for February 14, 2013 at 10:00 AM to consider the guilty plea agreement entered into by Transocean Deepwater Inc. (Transocean), pursuant to which Transocean would plead guilty to a one-count information charging Transocean with violation of the Clean Water and Migratory Bird Act and pay criminal fines and other penalties totaling $400 million. Any written submission by a victim must be received by the Court by February 1, 2013.

Access a release from the Attorney General (click here). Access a copy of the Court's Order, which provides contact information for victims, as well as the guilty plea agreement and charging document (click here).Access more information on the BP case (click here). Access a lengthy release from BP (click here). Access the Transocean Court's Order, which provides contact information for victims, as well as the guilty plea agreement and charging document (click here). [#Energy/OilSpill]

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